Water Footprint Labelling and WTO Rules

Published date01 November 2014
AuthorTracey Epps,Laura Manson
Date01 November 2014
Water Footprint Labelling and WTO Rules
Laura Manson and Tracey Epps*
A water footprint is a concept that measures the total
volume of freshwater used to produce a product, mea-
sured over the full supply chain. This article discusses
one idea that has been mooted to ameliorate impend-
ing freshwater shortages – namely to encourage con-
sumers to purchase products with a low water
footprint by using a water footprint label. A label may
provide sufficient incentive for consumers, and gov-
ernments may impose measures such as taxes or
import restrictions based on the water footprint. The
article explores the international trade law implica-
tions of such measures and finds that, as with other
areas of environmental regulation, international
trade liberalization and the protection of sustainable
freshwater resources are not incompatible goals.
However, water footprint labelling, and other associ-
ated measures, could have inadvertent trade law
implications, meaning that it will be important for
governments to give careful thought to their design
and application.
International trade in water takes place in various
physical guises: in consumable form, either as bottled
water, or in other water-based drinks; and in bulk.
However, such physical transfers of water occur only
on a very small scale.1Of far greater practical signifi-
cance is international trade in products with a sub-
stantial ‘virtual water’ content. The concept of ‘virtual
water’ refers to the amount of water used in the pro-
duction of a good or service, and trade in ‘virtual
water’ has been identified as presenting significant
opportunities to enhance water use efficiency, particu-
larly in agriculture, and to address global and regional
imbalances in water availability.2As freshwater
scarcity becomes an increasingly pressing issue, a key
question that arises in considering how to encourage
trade and consumption of water-intensive products in
the ‘right’ direction is one relating to transparency –
namely, how do we know the virtual freshwater
content of any given product? An intriguing option
that has been mooted is to develop a water footprint
label that would assist in facilitating sustainable water
use by acting as a signal for the virtual water content
of products. Such a label would form the basis for
more well-informed consumer purchasing decisions,
and also more well-informed governmental policy.
Governments could implement water footprint label-
ling in an attempt to address freshwater scarcity
through discouraging trade and consumption of goods
with high virtual water content. They may also impose
taxes and import restrictions based on the label (i.e.,
adopt ‘trade-related water measures’). This article will
explore the international trade law implications of
such measures. It first sets out further background in
relation to freshwater scarcity, explaining why it is an
issue of no less significance than, for instance, climate
change. The article next considers the types of mea-
sures that governments might use to change consumer
behaviour, before examining such measures in light of
international trade rules.
Freshwater security3is one of the most pressing issues
on today’s global agenda. A rapidly growing population,
*Corresponding author: Tracy Epps.
Email: tracey.epps@mfat.govt.nz.
1This article will not attempt to discuss the trade that does occur, or
the related complications, such as whether water can be considered
a ‘good’ under international trade rules (e.g., there has been debate
as to whether water constitutes a ‘good’ under the North America
Free Trade Agreement and is therefore subject to the agreement’s
prohibition on export restrictions, or similarly, whether water can be
classif‌ied as a ‘good’ under the General Agreement on Tariffs and
Trade (GATT)); or the various instances of bulk water trade between
countries (e.g., between Singapore and Malaysia, or – in at least one
instance – between France and Spain).
2The concept of ‘virtual water’ was conceived by Professor Tony
Allan. See J.A. Allan, ‘Fortunately There are Substitutes for Water:
Otherwise Our Hydro-political Futures would be Impossible’, in: Over-
seas Development Administration (ed.), Priorities for Water
Resources Allocation and Management (Overseas Development
Administration, 1993), 13; J.A. Allan, ‘Overall Perspectives on Coun-
tries and Regions’, in: P. Rogers and P. Lydon (eds.), Water in the
Arab World: Perspectives and Prognoses (Harvard University Press,
1994), 65. See also D. Waughray (ed.), Water Security: The Water-
Food-Energy-Climate Nexus: The World Economic Forum Water Ini-
tiative (Island Press, 2011), at 69; and A. Gowlland Gualtieri, Legal
Implications of Trade in ‘Real’ and ‘Virtual’ Water Resources (Inter-
national Environmental Law Research Centre, 2008), found at:
3‘Water security’ refers to the capacity of a population to sustainably
provide adequate quantities of acceptable quality water for health,
livelihoods and development. See D. Grey and C. Sadoff, ‘Sink or
Swim? Water Security for Growth and Development’, 9:6 Water
Review of European Community & International Environmental Law
RECIEL 23 (3) 2014. ISSN 2050-0386 DOI: 10.1111/reel.12090
© 2014 John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.

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